EasyJet chokes on profit warning | Shares Magazine

EasyJet chokes on profit warning

Wed, 03/19/2008 - 09:41 — Dan Coatsworth

EasyJet has issued a profit warning after admitting that sky-high oil prices may severely eat into earnings.

The low-cost airline is facing an extra Â£45 million bill for fuel costs. It said this would reduce full-year profit despite an increase in the number of passengers.

EasyJet said it has so far sold 27% of its summer seats, which is slightly ahead of the level at the same time last year, and predicted that first-half results would meet the expectations outlined by management last month.

'It is unlikely such a large and immediate fuel increase could be mitigated in the short term by revenue improvements and cost actions, therefore pre-tax profits for the full year would be below previous guidance,' the group said in a statement.

EasyJet said the forward price for jet fuel for this summer had risen by about $160 to more than $1,000 per tonne.

Chief executive Andy Harrison said: 'The price of fuel will hit all airlines and we remain convinced that the combination of our new fuel efficient aircraft fleet, together with the proven strength of the EasyJet business model, will mean we shall emerge as winners in a high oil price environment.'

Shares in the group had fallen 16% to 316p in the first 90 minutes of trading on Wednesday.

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